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Construction Law Guide, Resources & information

Lawsuits over defects in new construction are very common. That litigation in turn frequently gives rise to disputes regarding liability insurance coverage for the alleged defects. The following scenario is typical. A builder/developer undertakes to build a condominium or housing development. The builder enters into a contract with a general contractor, which in turn enters into contracts with subcontractors. Very frequently, these contracts provide that the contractor in its contract with the builder, and the subcontractors in their contracts with the general contractor, will indemnify, respectively, the builder and general contractor for liability in connection with the project. Further, they provide that the subcontractors will also see to it that the builder and general are added to their liability insurance policies as additional insureds. In addition, the contractor or subcontractors may purchase products that are incorporated into the structure. Thus, another group involved in construction projects are the suppliers of those products. This article does not focus on coverage for products liability claims, which is a separate subject in its own right.

Then, after the project is built, the new homeowners discover what they contend are defects or deficiencies in the construction of the buildings or in the products supplied and incorporated. Frequently they also allege that the defects have caused damage to the property. Sometimes these claims include allegations of bodily injury, for example, when construction defects allow intrusion of rain water into the homes, resulting in bodily injury from exposure to mold growth. As a result, the underlying litigation may include claims for both property damage and bodily injury.

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